Monday, December 10, 2007

Beyond iPod

NEW YORK/SAN FRANCISCO (Reuters) - At Apple Inc's new store in Manhattan, the smiling "geniuses" and "concierges" standing at attention are as important as the iPods and Mac computers on display.

The store, Apple's second-biggest in the United States, has an entire floor dedicated to customer service and technical help, a key focus for the company and one that has helped drive sales growth.

"What the Apple stores do is give customers a place to come and feel and touch the products, and more importantly, talk to someone who knows the products intimately," said Tim Bajarin, president of Creative Strategies, a consultancy.

"That just does not exist well in the PC side. You can't get a similar experience at Best Buy or Circuit City," Bajarin said.

Apple met widespread skepticism when it opened its first stores in 2001, as many analysts scratched their heads at the company's entry into an unfamiliar business.

But the strategy has paid off in a big way. Apple stores pulled in $1.25 billion in revenue in the company's last fiscal quarter, a 42 percent jump from a year earlier and accounting for a fifth of total revenue.

Apple shares have more than doubled over the past year and closed up 2.4 percent on Thursday at $189.95.

There are more than 200 stores in five countries and Apple said in October it planned to open about 40 outlets in the next year, including its first in China.

The new store, the third in Manhattan, has an entire floor for technical support, one-on-one sessions and "pro labs" -- free classes on how to use Apple computers.

Its 46-foot-long (14-meter-long) "genius bar" can help 100 customers each hour and the store has 50 percent more space for tech support and education than any other Apple store.

"Where other stores end with a transaction, that's really where we like to begin," Ron Johnson, the senior vice president who leads Apple's retail strategy, told Reuters on the sidelines of a news briefing on Thursday.

Known for their clean, minimalist layouts, the stores are hailed by analysts as a model for consumer electronics retail.

Apple has swiftly adopted new technologies such as handheld scanners that ring up purchases on the floor rather than forcing people to line up at registers. Customers can go online to book time in a store with a "Mac genius" trouble-shooter or a "personal shopper" to help out with buying decisions.

The new store is located in Manhattan's former meatpacking district, known for its trendy restaurants and tony boutiques. While not a high-traffic shopping area, the three-storey outlet will tap the neighborhood's artistic demographic.

"This will be a high volume store," Johnson said.

Johnson spoke on the same day some U.S. retailers reported stronger-than-expected November sales, helped by a post- Thanksgiving rush and holiday discounts. But experts anticipate a challenging month ahead amid growing concerns over the health of the economy.